"The Fed's mission is to preserve the currency as a store of value by preventing inflation. . . . The Fed should not try to produce this or that rate of economic growth or unemployment."This is false, as anyone with a passing knowledge of the banking system knows. The Fed has a dual mandate: (1) prevent inflation, and (2) achieve maximum employment. In fact, it's federal law; 12 U.S.C. § 225a states:
The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.Thoma neatly eviscerates the rest of Will's god-awful column (which the Washington Post should be embarrassed for printing). It's ironic that morons like George Will who profess complete and total faith in "the market" know so little about markets. An efficient market economy needs governments to provide a myriad of services, and one of the most important things an efficient market economy needs is a central bank to manage monetary policy. One of the goals of monetary policy is to promote long-run economic growth. Will lacks the intellectual capacity to understand that not everything the Fed does is "government intervention" in the Glorious Free Market. George Will is the Herbert Hoover of our day.